2.5 Questions

1) The ________ is the change in total results under a new condition, in comparison with some given or known condition.

A) incremental effect

B) detrimental effect

C) conditional effect

D) exclusive effect

2) Gokey Company has a contribution-margin ratio of 0.30. Targeted net income is $76,800 and targeted sales volume in dollars is $480,000. What are total fixed costs?

A) $23,000

B) $44,160

C) $67,200

D) $144,000

3) Key Company has a targeted sales volume of 62,300 units. Total fixed costs are $31,200. The contribution margin per unit is $1.20. What is targeted net income?

A) $31,200

B) $37,440

C) $43,560

D) $74,760

4) Goy Company has a break-even point of 88,000 units. The contribution margin per unit is $9.60. The desired pre-tax profit is $18,096. How many units must be sold to achieve the desired profit?

A) 1,885 units

B) 88,000 units

C) 89,885 units

D) indeterminate

5) Assume the following facts:

Sales price$180 per unit

Variable cost$100 per unit

Total fixed costs$39,600

Targeted net income$52,800

How many units must be sold to achieve the targeted net income?

A) 513

B) 629

C) 963

D) 1,155

6) Hell Company has the following information available:

Selling price per unit$5.00

Variable cost per unit$3.50

Total fixed costs$90,000.00

Targeted net income$30,000.00

How many units must be sold to achieve the targeted net income?

A) 10,000 units

B) 27,000 units

C) 45,000 units

D) 80,000 units

7) The following information is available for Kinsner Corporation:

Total fixed costs$313,500

Variable costs per unit$99

Selling price per unit$154

If management has a targeted net income of $46,200, then the number of units that must be sold is ________.

A) 2,036 units

B) 2,336 units

C) 5,700 units

D) 6,540 units

8) The following information is available for Kismer Corporation:

Total fixed costs$313,500

Variable costs per unit$90

Selling price per unit$150

If management has a targeted net income of $59,400, then sales revenue should be ________.

A) $239,721

B) $580,067

C) $671,220

D) $932,250

9) As sales exceed the break-even point, a firm with a high contribution-margin percentage ________.

A) increases profits faster than does a firm with a low contribution-margin percentage

B) increases profits at the same rate as a firm with a low contribution-margin percentage

C) decreases profits at the same rate as a firm with a low contribution-margin percentage

D) increases profits slower than does a firm with a low contribution-margin percentage

10) ________ is the ratio of fixed costs to variable costs.

A) Contribution margin

B) Break-even point

C) Operating leverage

D) The margin of safety